Which statement is correct?
A)Diluted EPS assumes that all dilutive securities are converted.
B)Diluted EPS assumes that all anti-dilutive and dilutive securities are converted.
C)Diluted EPS assumes that all ordinary securities are converted.
D)Diluted EPS assumes that all ordinary and dilutive securities are converted.

Question

Quizplus · Accepted Answer

Diluted EPS assumes the conversion of all dilutive securities into common stock, which could potentially decrease earnings per share if the securities were to be converted. Anti-dilutive securities, which would increase EPS upon conversion, are not assumed to be converted in the calculation of diluted EPS.

Which Statement Is Correct